If you or a loved one is turning 65 and becoming eligible for Medicare this year, you are in good company. Baby boomers are aging into Medicare quickly — to the tune of about 4 million people a year, but many people don't understand how the program works.
Medicare is the federal health insurance program for people age 65 or older. It also covers certain younger people with disabilities and special needs like End-Stage Renal Disease. There are several parts to the program, as well as different coverage options so there's a lot to keep track of. You may have also heard about some new changes to the program. If you've done some research in the past, it's probably a good idea to revisit what Medicare covers.
Medicare can be overwhelming. Most baby boomers (60 percent) in a recent survey of eHealthInsurance customers did not know that Medicare does not work like regular health insurance. If you're one of them, don't feel bad. Trying to understand Medicare can make anyone's head spin. So, before you get inundated with sales pitches and unsolicited advice, it's important to learn the basics.
Health care is a very personal decision, and there's no one-size-fits-all approach when it comes to enrolling in a plan. Just like other health coverage, Medicare has terrific benefits, but it also has some gaps that you need to keep in mind.
Important things to remember about Medicare:
- Medicare doesn't cover everything. Medicare isn't designed to cover every possible need, and it has some out-of-pocket costs of which you should be aware. For example, prescription drugs are not covered under Original Medicare. Parts A and B have separate deductibles, as well as 20 percent coinsurance for most Part B services. Also, Original Medicare does not cap your annual out-of-pocket costs.
- Missing deadlines could prove costly. If you have a Medicare Advantage plan, or plan to enroll in one, you can change that plan once a year, every year, during the Annual Enrollment Period (AEP) that runs from October 15 to December 7. The same rules apply to stand-alone Medicare prescription drug plans. In some cases a person may qualify to change their coverage at other times during the year. Other opportunities to change may be available for certain qualifying events. If you want to enroll in a Medicare Supplement plan, you can enroll in that plan for six months after you become eligible for (and enroll in) Medicare Part B. After those six months have passed, an insurer can usually ask you health questions and may deny coverage, based on your responses.
- Small costs can add up. Monthly premiums are absolutely important when it comes to coverage. But, there are other factors you should also consider when comparing plans side-by-side, including deductibles, co-payments, co-insurance, out-of-pocket limits and physician networks. If you're shopping for a Medicare Advantage or prescription drug plan, you should also consider how your specific medications will be covered. You can compare plans at sites like PlanPrescriber.com.
- Private insurance options can help fill gaps in coverage. To fill in Medicare's gaps, some people opt for Medicare Supplement plans (also called Medigap), while some people choose Medicare Advantage plans. These plans help cover out-of-pocket costs in Medicare Parts A and B. Medicare Part D drug coverage is available as a "stand-alone" prescription drug plan (PDP) option, or bundled into Medicare Part C (Medicare Advantage) plans. Health care reform requires Medicare Advantage plans to limit someone's out-of-pocket costs to $6,700, or less. In 2012 the average cap on out-of-pocket costs was $4,500, according to the 2012 Medicare Advantage Plan Landscape Data Summary prepared by PlanPrescriber.com
- You don't have to change doctors. Just because you're enrolling in Medicare doesn't automatically mean you must find a new doctor. With Original Medicare, you generally can go to any doctor, hospital, or other facility that's enrolled in Medicare and accepting new Medicare patients. However, Medicare Advantage plans often include provider networks, and some networks are broader than others. If you have a doctor you prefer, make sure they're a preferred provider on the Medicare Advantage plan you want to sign up for.
There are a lot of things to keep in mind when enrolling in Medicare, but taking time now to research options will help you identify potential gaps in your Medicare coverage. If you need additional coverage, it's important to find the plan that best fits your unique needs.
Ross Blair is the founder and Chief Executive Officer of PlanPrescriber.com, a website that makes it easier for seniors and their caregivers to select and enroll in the best Medicare products for their specific needs.